Transition Strategy & Solutions

Case Studies - Business Transition and Exit Planning

Case 1

Issue: Very profitable, multi-million dollar photographic processing company owned 50%/50% by two founders. One founder was prepared to retire and sell out to other partner. Remaining partner wanted to transfer ownership to children while minimizing taxes

Capitus Solution

Members of Capitus Group:

Negotiated between partners to structure transaction

Developed a financial model

Re-structured all debt and raised additional debt to fund buy-out

Worked with tax/legal advisors to minimize tax and obtain inter-generational transfer

Acted in an advisory role post-transaction as CFO

Positioned company for renewed strategic focus and growth

Case 2

Issue: Management team of large, financial products firm wanted to buy-out company from financial owner.

Capitus Solution:

Members of the Capitus group:

Interviewed ownership and management to understand positions and issues

Interviewed ownership and management to understand positions and issues

Did research on industry to understand benchmarks and opportunities

Provided counsel on Business Plan and financial model with regard to options for exit

Provided input on decision making process for next steps and strategic direction

Are in process of developing an Advisory Board to aid in ongoing decisions and strategic focus

Raised debt for company to facilitate continued growth

Case 6

Issue: Owner of a manufacturing company needs to regenerate focus, enhance EBITDA and evaluate potential exit or intergenerational exit strategies.

Capitus Solution:

Members of the Capitus group:

Evaluated the company’s current position in their corporate lifecycle and examined their financial standing.

Aided the owner in determination of where he stood with regard to risk tolerance, personal lifestyle wants/needs and timeframe.

Provided counsel on developing a business plan and financial model.

Developed an Advisory Board to aid in ongoing decisions and strategic focus.

Are helping the owner to evaluate a potential intergeneration transfer.

Are providing ongoing input on the decision making process for next steps and strategic direction.

Case 7

Issue: The owner of a specialty transportation construction company was not currently interested in selling the business but wanted to reduce his work load to no more than 50%, reward a key employee and plan for a future transition out of the company.

Capitus Solution:

Members of the Capitus group:

Interviewed the owner & management to understand personal positions and issues in order to develop a needs analysis

Evaluated the company’s position on its lifecycle and determined that it needed to re tool for growth to meet demand opportunities presented by the aging transportation infrastructure

After it was determined that the company needed a COO, aid was given in the interviewing, negotiating and finally the hiring of a very experienced person.

Developed the transition team including the company’s CPA and lawyers to tax efficiently change the corporate structure and ownership to incentivize the new COO and another key employee.

Aided the company with acquisition of a new bank relationship to support their future cash needs given the expansion opportunities in the marketplace

Continue to act in an advisory role to support the profitable growth of the company

Case 8

Issue: Owner of a software company wanted to free-up time to focus on another company he owned. At the same time, he still needed to position the company for growth and position it for a potential future liquidity event

Capitus Solution:

Members of the Capitus group:

Interviewed staff to understand current roles and objectives

After determining that the organization needed to restructure its management team, Capitus proposed promoting an existing staff member to President

Helped the company focus on sales growth and work with the VP of Sales to develop a sales commission structure that incentivizes the salesforce to reach their goals

Aided Owner & President in developing a long term strategic direction

Act in an ongoing advisory role to help company execute their strategic objectives and enhance company value and saleability

Case 9

Issue: Owner of a manufacturing company needed to truly delineate costs and restructure company for enhanced profitability and potential succession

Capitus Solution:

Members of the Capitus group:

Conducted search and aided in hiring of a new CFO

Provided counsel regarding a restructure of corporate debt

Participated in annual strategic planning process

Maintained ongoing advisory role for both Owner and CFO

Case 10

Issue: Owner of a professional services consulting firm wanted to bring in a new high level person to enhance the EBITDA of the company, reduce future business risk and prepare the company for a sale in 3-5 years

Capitus Solution:

Members of the Capitus group:

Met with both the Owner and the new Consultant to determine personal goals and timeframes

Met with the CFO to understand the company’s place in its business lifecycle and current financial position

Worked with Owner, Consultant and CFO to develop a multi-year strategic vision and financial model

Helped to delineate what would be needed to enhance the value of the company and reduce future business risk

Developed a “Phantom Stock” model to incentivize the new Consultant to meet strategic goals and prepare the company for sale

Led a team including the company’s CPA and Attorney to formalize the “Phantom Stock” program

Continue to advise the Owner and executive staff in an ongoing oversight manner to assure the company meets or exceeds corporate goals and properly prepares for a future sale

Case 11

Issue: Owner of a company in a transportation related industry wanted no longer wanted to manage day-to-day operations. He also wanted to establish a plan to reward the existing COO for his increased responsibility and begin planning for a potential succession.

Capitus Solution:

Members of the Capitus group:

Met with Owner and COO to formally determine individual goals and timeframes

Developed a model to enable COO to buy some stock from the Owner as a reward for reaching profit goals

Worked with company CPA to recast financials, evaluate valuation, review tax implications and develop a financial model for the stock purchase by the COO

Worked with Owner and COO to examine corporate governance issues and their resolution

Assembled transition team including attorney and CPA to develop legal documents for stock purchase and governance/succession issues

Case 12

Issue: Owner of a specialized media company who was 88 years old made the decision to sell his business. He was sole proprietor with no succession plan. Capitus Group was asked to represent this business owner in the sale of his company.

Capitus Solution:

Members of the Capitus group:

Re-formatted and prepared financial statements

Reviewed and organized all materials necessary for due diligence

Prepared an Offering Memorandum package for potential buyers

Sourced and qualified several prospective buyers for the business

Provided detailed guidance on business valuation and pricing

Handled pricing and business point negotiations relevant to an Asset Purchase Agreement

Facilitated the deal closing

Provided guidance for both seller and buyer on first steps during the integration process

Case 13

Issue: Owner of a software company focused on the banking and credit union market was in the process of completing a major upgrade in system functionality and an expansion of delivery methods for their suite of software products. All product investment was initiated in order to generate rapid growth with the plan to double in size over the next 3 to 5 years. This goal was set to best position the company for sale and maximize business value for shareholders.

The CEO engaged Capitus Group to do a thorough analysis of the sales organization and marketing structure. The deliverable was an assessment of sales personnel, sales processes, marketing and communications programs and a comprehensive report on changes, upgrades, strategy and tactics in these disciplines to hit the aggressive revenue targets within the defined time frame.

Capitus Solution:

Members of the Capitus group:

Conducted extensive interviews with all sales staff members to understand current roles, skills, work habits and sales processes.

Traveled to each office location to work onsite with each sales rep.

Evaluated sales bandwidth and determine how many additional sales headcount would be necessary to meet the sales goal.

Reviewed lead generation programs and CRM system use.

Critiqued and reviewed all marketing channels including print, website, enewsletter, social media, public relations and live event participation.

Studied the client’s Key Opinion Leader position in the market and their role in Thought Leadership relative to published white papers, instructional videos and content curation.

Delivered a comprehensive report of findings along with a thorough blueprint of strategies and tactics that the company should consider implementing to reach targeted sales goals in the defined time frame.

Case 1

Issue: Owner of a company in a consumer products company focused in the home décor market wanted to make a strategic acquisition of a distressed company in its market sector to broaden their product line. The business owner had never acquired a company and had no understanding of the process or how to value the potential acquisition.

Capitus Solution:

Members of the Capitus group:

Met with Owner and COO to formally review the company’s objective for making the acquisition

Evaluated and analyzed all financial and diligence material provided by the seller’s business broker and developed a summary report for the buy-side client

Created a SWAT analysis of the target company including tangible and intangible benefits, and projected consolidation savings

Worked with Owner and COO to develop a deal pricing strategy as well as a deal pricing rationale to use during negotiations

Advised Owner and COO on structure and terms to use in the LOI related to the business points in the deal

Provided guidance on how to plan, budget and implement the smooth and successful integration of the acquired company

Case 2

Issue: Owners of two companies in the business and financial software industry were each having difficulty achieving necessary scale and market share to successfully grow their businesses. Capitus Group was engaged to explore the options of a strategic merger and facilitate negotiations between the two company owners.

Capitus Solution:

Members of the Capitus group:

Met with software industry experts to explore and validate the concept of merging the two companies

Introduced the two business Owners to both establish a personal relationship and to formally review each company’s objective for exploring a merger

Developed the due diligence process and timetable, the data categories and information subsets to be reported along with the time table for submission of all diligence material to be provided by each party

Served as the neutral intermediary between both Owners and provided guidance on deal structure and terms fair to both parties

Case 3

Issue: The 89 year-old owner of a specialized consumer media company made the decision to sell his company. There were several key challenges to overcome to successfully prepare this company for sale and then sell the business for this client. The owner did not have a succession plan or a manager on staff who could run the business for a new owner. He was the key holder of all business process knowledge and the only sales person. He had also experienced a significant health issue which was concerning for and eliminated many potential buyers once they discovered that they would have to rely on him to transfer client relationships and train them in business process.

Capitus Solution:

Members of the Capitus group:

Conducted deep operational diligence into the company’s business processes

Restructured and restated all financials reports

Developed key metrics and other non-financial benchmarks and measurements to allow a buyer to do thorough due diligence

Counseled the owner on realistic pricing for the business based on all characteristics of the business and requirements for successful transition

Sourced, pre-qualified and then introduced the owner to an extensive and diverse group of prospective buyers

Introduced prospective buyers to financial sources who could finance the deal

Acted as intermediary between the final buyer and seller to negotiate both price and business terms of the transaction

Advised the business owner on key business points contained in the final Asset Purchase Agreement which saved the owner a substantial amount of money in legal fees

Case 4

Issue: Owner of the largest and most prestigious creative services company in the Midwest wanted to exit. After 20 years of company ownership, this entrepreneur was ready to make a change. However, the business was not properly prepared or ready to be sold. Capitus Group was engaged to package the company for sale establish a value for the company and represent the owner in negotiations with strategic buyers.

Capitus Solution:

Members of the Capitus group:

Met with the business owner and spouse to formally review the goals, objectives and expectations behind the desire to sell the company.

Reviewed the owner and spouse’s personal life and financial plan post sale of the company.